Most taxpayers get refunds every filing season. Last year, the average federal tax refund was $2,651.
That’s a nice chunk of change, so it’s no surprise that the millions of folks who expect money back from Uncle Sam tend to file in January.
It’s also no surprise that this year these early filers are upset that they have to wait until Jan. 31 for the Internal Revenue Service to start processing tax returns. The delay is due to the federal government shutdown back in October, which slowed down the agency’s updating of forms and testing of its computer systems.
Some taxpayers, however, aren’t waiting. They are getting a head start on their tax return preparation so they’ll be at the head of the line when the IRS does open its electronic filing doors on Jan. 31.
And popular tax preparation software and franchise tax offices are helping these filers.
E-filed returns being accepted, but held
TurboTax began accepting e-filed returns on Jan. 2.
“TurboTax will securely hold tax returns and submit them to the IRS starting Jan. 31 on a first-in, first-out basis,” says Bob Meighan, CPA and vice president of Intuit TurboTax. “Last year, the average federal tax refund was almost $3,000. We know how important that money is to our customers. It’s why we’re encouraging people to file as soon as they can.”
That’s the same procedure at H&R Block, the country’s largest tax preparation company.
“Consumers don’t need to wait to prepare their returns. We will transmit it on their behalf,” says Kathy Pickering, executive director of The Tax Institute at H&R Block. “This ensures the return is completed before the IRS opens.”
Doesn’t apply to paper
This file-and-hold system, however, works only for electronically filed returns.
In announcing the delayed 2014 filing season start, the IRS told taxpayers that “there is no advantage to filing on paper before the opening date.”
And the IRS used that no-paper-returns-early plea to encourage e-filing, saying, “Taxpayers will receive their tax refunds much faster by using e-file or Free File with the direct deposit option.”
Free File opening early
Now about Free File. This IRS partnership with the tax software community will be back in 2014.
And it will be back before the official Jan. 31 filing season starts.
Free File 2014 will start accepting customers on Jan. 17, two weeks before the season opens.
Starting that day, says the IRS, Free File companies will “securely hold your completed tax return until Jan. 31 when the IRS begins accepting returns.”
This year, the option to prepare your taxes and e-file them at no cost at the Free File website (available as a link on the IRS.gov home page) is available to taxpayers with adjusted gross incomes of $58,000 or less. That earnings limit applies to all filing statuses.
So if you have all your necessary 2013 tax-filing material, you can go ahead and get it off your desk and your e-filed return into the IRS’ holding pattern.
But remember, you won’t get your refund any quicker. The IRS won’t begin the actual processing of your 1040 form or those of others until Jan. 31.
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Veteran contributing editor Kay Bell is the author of the book “The Truth About Paying Fewer Taxes” and co-author of the e-book “Future Millionaires’ Guidebook.”